Weekly Market Insights

The Markets (as of market close May 26, 2023)

Wall Street ended last week with mixed returns. The Nasdaq and the S&P 500 were pushed higher by tech shares and artificial intelligence (AI) stocks. The Global Dow, the Dow, and the Russell 2000 closed in the red. Ten-year Treasury yields rose 11.0 basis points, as they drew closer to their 2022 year-end values. For much of last week, investors kept a close watch on negotiations involving the U.S. debt ceiling. By last Friday, it appeared progress was being made on a deal to raise the debt limit and cap federal spending for two years. Crude oil prices advanced for the second straight week. The dollar advanced against a basket of currencies, while gold prices declined for the third consecutive week. 

Stocks closed last Monday generally higher, driven by advances in technology, communications, small-cap stocks, and financials. Investors focused on late-afternoon debt ceiling talks between President Biden and House Speaker McCarthy. The Russell 2000 gained 1.2% to lead the benchmark indexes listed here, followed by the Nasdaq, which climbed 0.5%. The S&P 500 and the Global Dow ended the day flat, while the Dow dipped 0.4%. Ten-year Treasury yields inched up 2.7 basis points to 3.71%. Crude oil prices gained 0.4% to $71.81 per barrel. The dollar edged higher, while gold prices fell 0.4%.

Debt ceiling worries hit Wall Street last Tuesday, sending stocks lower. The Nasdaq fell 1.3%, followed by the S&P 500 (-1.1%), the Global Dow and the Dow (-0.7%), with the Russell 2000 dipping 0.3%. Ten-year Treasury yields slipped 2.1 basis points to 3.69%. Crude oil prices advanced for the second consecutive day, climbing 1.4% to $73.06 per barrel. The dollar and gold prices increased.

Last Wednesday saw stocks slide lower for a second straight session. Once again, investors worried about a potential U.S. debt default. The Russell 2000 and the Global Dow dropped 1.2%, the Dow fell 0.8%, the S&P 500 lost 0.7%, and the Nasdaq slipped 0.6%. Ten-year Treasury yields inched higher to close at 3.71%. Crude oil prices continued to climb, jumping 1.3% to $73.86 per barrel. The dollar advanced, while gold prices fell 0.6%.

AI stocks surged last Thursday, pushing the Nasdaq and the S&P 500 higher among the benchmark indexes listed here. Communication services and information technology posted notable gains, which, along with consumer discretionary, were the only market sectors to close higher. The Nasdaq gained 1.7% and the S&P 500 rose 0.9%. The Russell 2000 fell 0.7%, the Global Dow dropped 0.3%, and the Dow slipped 0.1%. Yields on 10-year Treasuries added 9.5 basis points to close at 3.81%. The dollar advanced for the fourth straight session. Gold prices dipped 1.2%. Crude oil prices reversed course, slumping 3.3% to $71.92 per barrel.

Stocks closed higher last Friday, as traders grew more confident that a deal on the U.S. debt ceiling would be reached. For the second straight day, tech and AI stocks drove the indexes. The Nasdaq gained 2.2%, the S&P 500 rose 1.3%, the Russell 2000 climbed 1.1%, the Dow added 1.0%, and the Global Dow advanced 0.8%. Ten-year Treasury yields were flat, closing at 3.81%. Crude oil prices advanced 1.3% to $72.78 per barrel. The dollar dipped lower, while gold prices inched higher.

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic News

• The second estimate for the first-quarter gross domestic product was revised up 0.2 percentage point to 1.3%. GDP expanded at an annualized rate of 2.6% in the fourth quarter. Personal consumption expenditures increased 3.8%. Consumer spending on durable goods rose 6.3%, while spending on services increased 2.5%. Residential fixed investment dropped 5.4%, while nonresidential fixed investment increased 1.4%. Exports advanced 5.2%, while imports, which are a negative in the calculation of GDP, increased 4.0%. The personal consumption expenditures price index increased 4.2%.
• Inflationary pressures increased in April, giving more reason for the Federal Reserve to continue to increase interest rates. The personal consumption expenditures price index rose 0.4% in April after inching up 0.1% in March. Consumer prices less food and energy also rose 0.4% in April. Over the last 12 months, consumer prices have increased 4.4%, well above the Fed target rate of 2.0%. Personal income and disposable personal income rose 0.4% in April. Consumer spending jumped 0.8% in April after increasing 0.1% in March.
• The international trade in goods deficit widened more than expected in April, up 17.0% from March. Exports decreased 5.5%, while imports rose 1.8%. Since April of 2022, exports of goods have declined 5.8%, while imports are down 7.1%.
• New orders for durable goods increased for the second straight month in April, after increasing 1.1% from March. Transportation equipment, also up for two consecutive months, drove the increase, up 3.7% in April.
• Sales of new single-family homes increased for the second straight month in April, climbing 4.1% over the March total. Available inventory in April declined to a supply of 7.6 months, down from the March pace of 7.9 months. The median single-family home price in April was $420,800, a decline of 8.3% from March ($455,800) and 8.9% below the April 2022 median sales price of $458,200. The average sales price in April was $501,000, 11.6% under the March price of $559,200 and 12.2% below the April 2022 average sales price of $562,400.
• The national average retail price for regular gasoline was $3.534 per gallon on May 22, $0.002 per gallon lower than the prior week's price and $1.059 less than a year ago. Also, as of May 22, the East Coast price decreased $0.016 to $3.381 per gallon; the Gulf Coast price fell $0.039 to $3.040 per gallon; the Midwest price increased $0.029 to $3.469 per gallon; the Rocky Mountain price rose $0.061 to $3.579 per gallon; and the West Coast price dipped $0.005 to $4.514 per gallon.
• For the week ended May 20, there were 229,000 new claims for unemployment insurance, an increase of 4,000 from the previous week's level, which was revised down by 17,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 13 was 1.2%, unchanged from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended May 13 was 1,794,000, a decrease of 5,000 from the previous week's level. States and territories with the highest insured unemployment rates for the week ended May 6 were California (2.3%), New Jersey (2.2%), Massachusetts (2.0%), Alaska (1.6%), New York (1.6%), Oregon (1.6%), Puerto Rico (1.5%), Rhode Island (1.5%), Washington (1.5%), and Illinois (1.4%). The largest increases in initial claims for unemployment insurance for the week ended May 13 were in Ohio (+1,608), Connecticut (+975), Illinois (+868), Tennessee (+640), and Colorado (+599), while the largest decreases were in Missouri (-2,234), Massachusetts (-1,660), New Jersey (-1,016), Pennsylvania (-742), and Virginia (-715).

Eye on the Week Ahead

The labor sector is front and center this week with the releases of the April Job Openings and Labor Turnover Survey (JOLTS) and the May report on employment. In March, the number of job openings decreased 384,000, while the number of hires and separations changed little. The employment situation report showed 253,000 jobs were added in April, while the number of unemployed was relatively unchanged.

The Markets (as of market close May 19, 2023)

Stocks trended lower last week, with only the Nasdaq able to eke out a gain. Investors remained pensive as they await negotiations on the debt ceiling. With roughly 92% of the S&P 500 companies having reported first-quarter earnings thus far, results appear headed down 2.5% from last year. This follows a 4.6% drop in fourth-quarter earnings. Despite the downturn, FactSet reported that 78% of the companies have reported earnings that beat expectations, which is the most since the third quarter of 2021. So far in 2023, only the Russell 2000 has yet to reach its 2022 closing value. The remaining benchmark indexes listed here remain ahead of where they began this year, despite lackluster results through the first two weeks of May. Crude oil prices declined for the fourth consecutive week on concerns of weakening demand. Gold prices slipped lower but remained over $2,000.00 per ounce. 

The Dow and the Russell 2000 slipped on a day of mixed returns last Monday. The Nasdaq, the S&P 500, and the Global Dow inched up minimally. In fact, the indexes moved very little throughout the day as investors contemplated ongoing banking concerns and the debt ceiling negotiations. Ten-year Treasury yields added 7.5 basis points to close at 3.52%. Crude oil prices gained 2.0% to reach $72.79 per barrel. The dollar and gold prices advanced on the day.

Last Tuesday proved to be another lackluster day of trading in the market as investors awaited the latest inflation data and the outcome of the meeting between President Biden and House Speaker McCarthy over the debt ceiling. The Nasdaq (-0.6%) and the S&P 500 (-0.5%) slid the furthest among the benchmark indexes, followed by the Global Dow and the Russell 2000, which dipped 0.3%. The Dow lost 0.2% on the day. The yield on 10-year Treasuries was flat at 3.52%. Crude oil prices continued to advance, gaining 0.5% to $73.51 per barrel. The dollar and gold prices rose higher.

Stocks rebounded last Wednesday, with the Nasdaq (1.0%), the Russell 2000 (0.6%), and the S&P 500 (0.5%) posting gains, while the Global Dow (-0.3%) and the Dow (-0.1%) dipped lower. Bond prices rose on increased demand, pulling yields lower. Ten-year Treasury yields lost 8.2 basis points to settle at 3.43%. Crude oil prices slid 1.3% to $72.79 per barrel. The dollar and gold prices also declined. Investors took some encouragement that inflation may be trending lower following the April Consumer Price Index report (see below), which showed prices increased 4.9% since April 2022, the smallest 12-month increase in two years. 

The Nasdaq was the only benchmark index to close higher (0.2%) last Thursday, driven by large-cap tech stocks. The other benchmark indexes listed here ended the session lower with the small caps of the Russell 2000 falling 0.8%, followed by the Dow (-0.7%), the Global Dow (-0.6%), and the S&P 500 (-0.2%). Ten-year Treasury yields declined to 3.39%. The dollar rose higher, while gold prices fell for the second straight session.

Wall Street saw stocks falter last Friday as the Dow fell for the fifth straight session. The Nasdaq fell 0.4%, the Global Dow lost 0.3%, the Russell 2000 and the S&P 500 declined 0.2%, while the Dow slipped 0.1%. Crude oil prices fell 1.1%, the dollar advanced 0.6%, while gold prices decreased 0.2%. The yield on 10-year Treasuries added 6.6 basis points to reach 3.46%.

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic News

• Retail sales rose 0.4% in April after declining 0.7% in March. For the 12 months ended in April, retail sales have increased 1.6%. Several categories contributed to the April advance in retail sales including motor vehicle and parts dealers (0.4%), building material and garden equipment and supplies dealers (0.5%), health and personal care stores (0.9%), general merchandise stores (0.9%), miscellaneous store retailers (2.4%), nonstore (online) retailers (1.2%), and food services and drinking places (0.6%). Retailers that saw sales decrease include furniture and home furnishing stores (-0.7%), electronics and appliance stores (-0.5%), food and beverage stores (-0.2%), grocery stores (-0.4%), gasoline stations (-0.8%), clothing and clothing accessories stores (-0.3%), sporting goods, hobby, musical instrument, and book stores (-3.3%), and department stores (-1.1%).
• According to the latest data from the Federal Reserve, industrial production rose 0.5% in April following two consecutive flat months. In April, manufacturing increased1.0%, bolstered by a strong gain in the output of motor vehicles and parts. Factory output, excluding motor vehicles and parts, moved up 0.4%.The index for mining rose 0.6%, while the index for utilities dropped 3.1%, as milder temperatures in April lowered demand for heating. Total industrial production in April was 0.2% above its year-earlier level.
• The number of building permits issued for residential housing construction declined 1.5% in April and was 21.1% below the April 2022 rate. However, building permits issued for single-family construction increased 3.1% last month. Housing starts rose 2.2%, while single-family housing starts advanced 1.6%. Housing completions fell 10.4% in April, while single-family housing completions were down 6.5%.
• Sales of existing homes fell 3.4% in April and were down 23.2% from April 2022. Total housing inventory sat at a 2.9-month supply. The median existing-home price in April was $388,800, 3.6% above the March price of $375,400 but 1.7% below the April 2022 price of $395,500. Single-family home sales also declined in April, falling 3.5% from March. The median existing single-family home price was $393,300 in April, 3.6% above the March price ($379,500) but 2.1% under the April 2022 price ($401,700).
• The national average retail price for regular gasoline was $3.536 per gallon on May 15, $0.003 per gallon higher than the prior week's price but $0.955 less than a year ago. Also, as of May 15, the East Coast price decreased $0.030 to $3.397 per gallon; the Gulf Coast price rose $0.034 to $3.079 per gallon; the Midwest price increased $0.047 to $3.440 per gallon; the Rocky Mountain price declined $0.020 to $3.518 per gallon; and the West Coast price dipped $0.011 to $4.519 per gallon.
• For the week ended May 13, there were 242,000 new claims for unemployment insurance, a decrease of 22,000 from the previous week's level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 6 was 1.2%, unchanged from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended May 6 was 1,799,000, a decrease of 8,000 from the previous week's level, which was revised down by 6,000. States and territories with the highest insured unemployment rates for the week ended April 29 were California (2.4%), New Jersey (2.2%), Massachusetts (2.0%), Alaska (1.7%), Illinois (1.6%), New York (1.6%), Oregon (1.6%), Rhode Island (1.6%), Minnesota (1.5%), Puerto Rico (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended May 6 were in Massachusetts (+6,420), Missouri (+2,596), California (+1,997), Texas (+1,707), and New York (+1,212), while the largest decreases were in Kentucky (-3,026), Colorado (-1,526), Georgia (-916), Wisconsin (-494), and New Hampshire (-428).

Eye on the Week Ahead

This is a busy week for important economic data. New single-family home sales figures for April are released this week. March saw sales increase 9.6% for the fifth straight month. The second estimate of first-quarter gross domestic product is out this week. The first estimate showed the economy accelerated at an annualized rate of 1.1%. The personal income and outlays report for April is also available this week. Data from the last report showed consumer spending was flat in March, while consumer prices for goods and services rose 0.3%.